Five Years of the Belt and Road Initiative

Established 2000 years ago by Chinese imperial envoy Zhang Qian, the ancient Silk Route linked China to Central Asia and the Middle East in the days of the Han Dynasty. In the modern world today, the same Silk Route has been revived in the form of the Belt and Road Initiative (BRI) Marking five years since China’s Belt and Road Initiative was launched, this year is not only a milestone, it is also a juncture to take stock of the mega-project and assess its progress and impact.

Generally seen as the most ambitious geostrategic initiative of this century, the BRI is mostly misunderstood and taken as a threat or a new ‘great game’. Basically, it is an investment project affecting two-thirds of the global population and the aim is to provide the necessary infrastructure to enable a free flow of logistics from some of the most under-developed and remote parts of the world to more developed countries and specially built economic zones. Bridging the infrastructure gap in lesser developed continents like Asia and Africa, it was just a matter of time before the idea clicked with more developed, rich countries as they all needed markets to sell their goods. Having the largest populations, the lesser developed nations in these two continents only lacked trade facilities and economic inter-connectivity.

And trade and transport connectivity is exactly what China has sought to provide, at the same time it has also ensured its own solid economic links with these new untapped global markets. Developing infrastructure across South East Asia, Eurasia, the Middle East, Africa and the Indian Ocean, China has not only revived the ancient Silk Route, it has opened up opportunities for everyone. Addressing a conference on the occasion in Beijing, President Xi Jinping  stressed that the initiative was about economic co-operation and not any kind of geopolitical or military alliance. Creating an open club promoting inclusiveness was the intention and it was not any sort of  ‘China Club’, he said.

Based on two major sea and land routes, namely the 21^st Century Maritime Silk Road and the Silk Road Economic Belt, the development plan is then divided into six main corridors. Up till now, the China-Pakistan Economic Corridor is the most well-known as it was the first to be initiated. Having the distinction of being called the ‘flagship corridor’ of the BRI due to the vital location and accessibility of Gwadar sea-port, this corridor received priority and was developed on a fast-track basis.

Also a focal part of China’s foreign policy today, the BRI has five main targets, developing trade ties, infrastructure, political co-operation, financial integration and most important of all, people to people exchanges. Establishing local banks, China is investing $4 -8 trillion in the BRI initially and it has created a $40 billion Silk Road Fund. Having the largest foreign currency reserves at $3.6 trillion, China is also the largest exporter globally with $2.34 trillion and the largest importer at $1.96 trillion. Not only that, it is the biggest financier of the Asian Infrastructure and Investment Bank (AIIB) with investments around $20 trillion so it was in a good position to launch the BRI.

Funded by the Asian Infrastructure Investment Bank (AIIB), EXIM Bank and the China Development Bank, the following projects valued above US $1 billion each have been successfully completed in the last five years;

Construction of seaports in Pakistan, Sri Lanka, Turkey and Israel.

Construction of railway networks in Malaysia and Laos.

Construction of power plants in Pakistan, Bangladesh, Russia, Indonesia, Nepal, Laos and Vietnam.

Construction of oil and gas pipe networks in Pakistan, UAE, Iraq, Kazakhstan, Myanmar, Brunei, Russia and South Africa.

Real estate projects in Malaysia, South Korea and Sri Lanka.

Various logistics centers in Singapore.

Construction of steel mills in India, Serbia and Mongolia.

Investments in the financial sector in the Czech Republic, South Korea and Singapore.

Additionally, 82 overseas economic and trade zones were set up while 16 free trade agreements were signed with 24 countries in May this year. Meanwhile, China’s trade with BRI countries grew in this five-year span and exceeds $5.5 trillion today. Placing emphasis on increasing imports from BRI countries in the coming years to reduce the trade deficit, China believes in sustainability and balanced trade relations. Further investment exceeding $1 trillion is also to be carried out on free trade zones and other projects.

Notwithstanding controversies and negative perceptions, it does seem like the BRI is beginning to give positive results. Instead of looking inward, China preferred trade connectivity and incorporated it as a foreign policy effort that can benefit all parties. Predictably, in the long run, the only effective response other global powers can adopt towards the BRI is an even better economic vision that is strategically planned, amply resourced and sustainable over time.